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Wednesday March 12, 2014 MYT 1:25:02 AM
Wednesday March 12, 2014 MYT 1:26:10 AM
by elizabeth piper
MOSCOW (Reuters) - Surrounded by faithful aides, President Vladimir Putin hears no opposition to his plans in Crimea, allowing him to drive Russia's bid to reclaim Ukraine's southern region guided by little more than his "inner voice".
Former and current officials paint a picture of a leader who counts on the unswerving loyalty of a handful of advisers from his administration and security services to draft policy that has plunged relations with the West to a new post-Cold War low.
That the seizure of Crimea, home to Russia's Black Sea Fleet, could tip a faltering economy into recession, spark visa bans and asset freezes on top officials and isolate Russia in ways not seen since Soviet times have not been considerations.
Those who disagree with his policies, fearing Putin may be ushering in a period of economic stagnation, have not yet spoken out against a leader who has successfully whipped up nationalist fervour over the "brotherly nation" next door.
For the time being, Putin can rely on a system of control he has honed and cultivated since he first came to power 14 years ago. It is a closely marshalled hierarchy of loyalty where even debate and disagreements are often choreographed for the benefit of state television stations which film government meetings.
But the Crimea move has led to mutterings of discontent, mostly among the financial and economic ministries, who were cut out of the meeting when it was decided to act over a region Putin felt might be lost forever if Kiev's new leaders were successful in taking Ukraine into the European Union.
"His closest adviser is his inner voice," said a source who is close to the Kremlin. "He had to act. He had no choice."
Sources say Putin took the decision on Crimea with his closest advisers: Sergei Ivanov, head of the presidential administration, Kremlin strategist Vyacheslav Volodin, Kremlin aide Vladislav Surkov, Foreign Minister Sergei Lavrov and the heads of the security services.
The response was unanimously in favour of action. Within days, Russian forces had occupied the peninsula and a new Russian separatist leadership was placed in charge, preparing for a referendum to secede from Ukraine and join Russia.
Putin has since said Russia has not been acting in Crimea but allowing local self-defence units to act spontaneously, an assertion derided as "Putin's fiction" by Washington.
There was little he had to do, former officials and analysts said. Russian forces already based there, with the help of special forces, mobilised to seize the peninsula, a favourite summertime resort for Russians.
In Russia, the action is widely seen as a legitimate response to Western support for the demonstrators who toppled pro-Russian President Viktor Yanukovich last month.
"It's like if you're watching television with a neighbour and the programme's finished but then they try to run off with the television. You cannot let them get away with it, can you?" said the source.
The tough response showed a type of behaviour that has marked Putin's long rule but has been seen more often in recent years as the more liberal thinkers who once influenced him have been pushed out of his closest circle.
By excluding the finance and economy ministries, he deliberately shut out advisers who might have urged caution.
Russia's economy was already in danger: growth has dropped and should fall further this year, and investment flows are paltry. Finances are still dependent on oil prices more than 20 years after the fall of the Soviet Union.
Just the threat of Western sanctions has already hurt: the central bank was forced to hike interest rates and burn through billions to prop up the rouble. But Crimea may also help change the subject from economic troubles that would have been inevitable anyway, and shift blame to the West.
"He knows he cannot do anything about the economy ... Crimea is a very good excuse for Putin," the source said.
Nevertheless, those who guide economic policy are worried that Crimea could turn tough times into a full-blown recession.
"It's a little bit frightening thinking about what will happen. I do not see the whole picture and can only judge on fragments. It seems to me that this is high stakes poker when both side bluffs big time," one well-placed official said.
"The risks, in my opinion, are big and the losses could also be large too."
VILLAS IN NICE VS. COURT IN THE HAGUE
The European Union and United States have viewed sanctions against Russia with some reluctance, especially in Europe, which depends on Russian natural gas. So far, measures discussed are aimed mainly at the elite, in the hope of prodding those close to Putin to change policy without fundamentally altering trade.
Washington has ordered visa bans and assets freezes on an as-yet-unpublished list of individuals it blames for threatening Ukraine's sovereignty. Brussels is threatening asset freezes, travel bans and other sanctions.
However, Putin could also use the sanctions threat to his own advantage by presenting it as a loyalty test: since he returned to the presidency two years ago, he has told politicians to close their foreign bank accounts.
Wealthy Russians may find it hard to complain in public about losing access to banks and vacation homes in the West. So far, oligarchs have largely kept silent, restricting their comments to saying their businesses are unaffected by events.
One rare exception is tycoon-turned-politician Mikhail Prokhorov, owner of the Brooklyn Nets basketball team, who called for international cooperation over Ukraine, warning the "longer we take in finding a resolution, the more it will cost".
For now, officials will be reluctant to challenge Putin's position for the sake of a visa. Some may lose money, but they would have been likely to do so anyway as the rouble weakens. Any economic pain will probably not be enough to force Russia's rich and powerful to abandon the former KGB spy.
"Yes our elite won't like it very much, but it has no other options," Konstantin Simonov, general director of the National Energy Security Fund, wrote in the Vedomosti newspaper.
"The West, in essence, proposed a tough choice: Bring us Putin's head and you will keep your villas in Nice. But the elite does not just fear Putin. They also don't believe the West, thinking it could abandon them. Better to have a villa in Hong Kong or Thailand than end up in court in the Hague."
(Additional reporting by Polina Devitt and Katya Golubkova; Editing by Peter Graff)
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